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With the outbreak of COVID-19, contractors are experiencing severe disruption across many of their projects, with construction and engineering works facing significant delays, site closures and members of the project team being asked to work from home or forced to self-isolate.
There will be a heavy burden on contractors’ in-house legal teams with the need to quickly serve many notices and ensure that contractual risk is minimised right across the contractual chain, from contractors’ client relationships through to the subcontractors and suppliers.
"Whilst contractors may not currently be able to identify specific impacts, by issuing a notification they will be able to protect their contractual position. It is important to carefully read the contract requirements in terms of both notifications and requirements for further additional particularisation."
If the contract is in a common law jurisdiction, it is likely to include a force majeure clause on which contractors could seek to rely. The force majeure clause will likely entitle contractors to additional time, and in some cases cost, should a delay occur. It may also provide relief against financial consequences. Alternatively, there may be opportunities to claim for financial relief should the contract be ‘frustrated’ or there are changes in law.
If the contract is in a civil code jurisdiction, it most likely will not include an express force majeure clause as the concept of force majeure (or similar) should be recognised in the civil code. The concept of force majeure will likely entitle contractors to additional time should a delay occur. There may be opportunities to additionally claim for financial relief should the contract include a hardship clause, or due to changes in law. Alternatively, contractors may have to apply to the courts and make a case for ‘exceptional circumstances’ if there is no express hardship clause in the contract.
"A point to remember is that force majeure only applies where the contract is executed before occurrence of the force majeure event, so contractors need to ensure that upcoming contracts provide expressly for this pandemic situation."
In addition to the above advisory guidance, below is a ten-point checklist:
Download Ten-point Checklist and Guidance Advice here.
If you require any further information or wish to have an e-chat with our executive director and experienced claims specialist, Charles Wilsoncroft, contact firstname.lastname@example.org.